Avenging Fallen Comrades

China’s foreign ministry isn’t sure the US possesses the “sincerity and capability to properly handle crises and stabilize relations.”

That’s according to spokesman Wang Wenbin, who on Thursday again excoriated the Biden administration for executing a Chinese balloon national. Washington, Wang suggested, should avoid additional escalations around what he described as an “unexpected, isolated incident.”

For what it’s worth, there may be something to China’s claims that its fallen airship lost its way. Although Beijing’s weather balloon cover story was widely and convincingly discredited, it’s possible China meant to send the vessel over Guam.

US intelligence saw the balloon lift off from Hainan Island, and according to officials who spoke to the Washington Post,

US monitors watched as [it] settled into a flight path that would appear to have taken it over Guam. But somewhere along that easterly route, the craft took an unexpected northern turn. [A]nalysts are now examining the possibility that China didn’t intend to penetrate the American heartland with its airborne surveillance device. The balloon floated over Alaska’s Aleutian Islands… then drifted over Canada, where it encountered strong winds that appear to have pushed the balloon south into the continental United States.

So, maybe it was an accident after all. That doesn’t mean the Pentagon was wrong to shoot it down, but it does suggest that, as the Post put it, “the ensuing international crisis that has ratcheted up tensions between Washington and Beijing may have been at least partly the result of a mistake.”

If that account is accurate, it’d also explain China’s initial response, which was uncharacteristically apologetic. The rhetoric out of Beijing quickly sharpened, though, and the tenor of Thursday’s foreign ministry briefing suggested China’s tone will remain barbed — at least in public.

Antony Blinken, who was scheduled to visit Beijing before the balloon fiasco made the optics impossible, will be in Germany for the Munich Security Conference on Friday. Wang Yi will be there too. He’s not exactly famous for affability, but is expected to sit down face-to-face with Blinken. As Axios wrote, “The meeting has not been officially confirmed [and] a failure for Blinken and Wang to meet would indicate how far the US-China relationship has deteriorated.” Kamala Harris will deliver a speech at the conference.

China on Thursday took mostly symbolic actions against Lockheed and a Raytheon subsidiary. Ostensibly, the new sanctions were related to arms sales to Taiwan, but appeared to represent the “countermeasures” Beijing threatened on Wednesday, when the foreign ministry promised to avenge the dead balloon.

Meanwhile, China’s Treasury holdings fell a fifth month, according to the latest TIC data released on Wednesday afternoon in the US.

China’s official holdings (and remember, this doesn’t count custody accounts) were $867.1 billion in December, more than $200 billion below Japan’s pile, and the lowest since June 2010. Belgium’s holdings, often attributed to Beijing, rose by more than $21 billion.

While China’s optically lower stash might represent an ongoing effort to “diversify” the country’s reserves, I’d remind readers that interpreting the TIC data is the furthest thing from straightforward.

Before you parrot any “New World Monetary Order” narratives, note that, as Bloomberg observed, “China may be selling down its massive pile of Treasurys but only in favor of other US government debt.” Beijing bought nearly $122 billion in agency debt from the US last year, a record.